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Turnbull government is taxing the friendship

Life is about to get much harder for Malcolm Turnbull. His government has gone into overdrive softening us all up for an increase and possible broadening of the GST.

Theoretically that should make life a little less challenging for Bill Shorten. He’s been having a terrible time of it lately as the nation continues to celebrate Tony Abbott’s replacement in the top job.

Cabinet secretary Arthur Sinodinos highlights the key to the government strategy: “If you’re someone like Malcolm, I think if you want to do something substantial you’ve got to do it quickly and upfront and you’ve got to do it when you’re in a capacity to maximise the use of your political capital to sell a story to the Australian people.”

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That contribution triggered a new round of early election speculation about a possible St Valentine’s Day announcement next February for a March election.

Hold your horses, was the Prime Minister’s advice: “We will be going to an election next year … I would say around September/October … is when you should expect the next election to be.”

That’s fine, but the golden rule of prime ministers and election dates still applies. They will call a poll when they are most confident of winning it.

This is where it gets tricky. Going to an election with a GST rise as a major plank of tax reform is a high-risk strategy.

Joe Hockey's second budget harks back to John Howard's voter-friendly approach. Photo: Getty

The introduction of a GST almost cost John Howard the prime ministership at the 1998 election. Photo: Getty

Just ask John Howard. In 1998 he lost the two-party-preferred vote and Labor picked up 18 seats, just short of forming government.

Both Mr Turnbull and his Treasurer play down the various GST scenarios as “speculation”.

True, but it’s a feeding frenzy of the government’s making. The latest ploy was to have a little-known backbencher, the Nationals’ David Gillespie, have the Parliamentary Budget Office cost the New Zealand model.

Mr Gillespie, who lives in Port Macquarie, just so happened to be in Canberra on a non-sitting Monday to give a series of TV and radio interviews spruiking the results.

So we’re told a 15 percent GST on almost everything would fund health, hospitals, education, tax cuts and generous compensation to low-income earners.

Labor’s Chris Bowen says it’s unbelievable: “When you get an extra dollar from the GST you spend it once – those proposals spend it two or three times.”

A $68 billion GST would make Mr Abbott’s “great big new carbon tax” scare look like a minnow. If cost of living is the political pressure point for voters this is hitting the bullseye.

Mr Bowen makes no bones about it: Labor will run hard and fast on it.

The Prime Minister is seeking to calm these fears before they get out of hand.

“Any changes to the tax system have got to be ones that ensure that there is no disadvantage to the most vulnerable Australians, to less well-off Australians,” he says.

Although pensioners, low-income taxpayers and social welfare recipients can receive compensation, it can’t keep up with a GST that floats forever on top of retail prices.

Then there are the 2.5 million Australians who earn less than $18,200 per annum. They are below the tax-free threshold. Compensating them will require some agile thinking.

Arthur Sinodinos is right.

The government needs to get its preferred model out there sooner rather than later no matter when the election is. And before it begins to lose too many of its newfound friends.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with 40 years’ experience covering Australian politics. He is Contributing Editor for Network Ten, appears on Radio National Breakfast and writes a weekly column on national affairs for The New Daily. He tweets at @PaulBongiorno

Read all of his columns here

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